Difference between revisions of "Net income"
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| − | '''Net income''' is equal to the [[income]] that a firm has after subtracting costs and [[expense]]s from the total [[revenue]]. Expenses will typically include [[tax]] expense. For a [[merchandising]] [[company]], subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company [[advertising]], [[manufacturing]], and design and development costs are included. | + | '''Net income''' is equal to the [[income]] that a firm has after subtracting costs and [[expense]]s from the total [[revenue]]. Expenses will typically include [[tax]] expense. For a [[Merchandise|merchandising]] [[company]], subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company [[advertising]], [[manufacturing]], and design and development costs are included. |
Net income is sometimes called the '''bottom line''' because it is typically found on the last line of a company's [[income statement]]. | Net income is sometimes called the '''bottom line''' because it is typically found on the last line of a company's [[income statement]]. | ||
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== ASK query by Keyword == | == ASK query by Keyword == | ||
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Latest revision as of 21:01, 23 May 2010
Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Expenses will typically include tax expense. For a merchandising company, subtracted costs may be the cost of goods sold, sales discounts, and sales returns and allowances. For a product company advertising, manufacturing, and design and development costs are included.
Net income is sometimes called the bottom line because it is typically found on the last line of a company's income statement.
An equation for net income in merchandising:
Net income or Net loss = Revenue - Cost of goods sold - Sales discounts - Sales returns and allowances - Expenses = Profit
Another term that is closely related to this is top line. As the Total Revenue forms the first line of the account statement, it is often called top line.
